Business Activities

Definition: Business activities refer to all the economic activities,

whether directly or indirectly related to making the goods and services
available to the consumer and ensure profit earning through customer
satisfaction. All the business activities depend on each other to ensure
constant process and cannot serve the purpose of customer satisfaction
solely.

Example: A farmer produces tons of pulses and cultivates it to sell it in

the market. He doesn’t have a warehousing facility to store his yield.
The lack of storage leads to crop destruction.

Classification of Business Activities

Other than the production of goods and services, there are numerous
other activities which can be termed as business activities.

It can be broadly classified as follows:

Industry

The industry refers to all the activities concerned with the extraction,
processing and production of goods and services to generate revenue.
Industries are majorly categorised under three heads:
Primary Industries

The enterprises engaged in the generation of raw material through

extraction or breeding of natural resources, whether living or non-living
are listed under primary industries.
For example; Breeding of sheep for wool, mushroom plantation, salt
extraction, coal mines

Based on the process through

which the natural resources are acquired, the primary industries are
divided into the following two types:

• Extractive: Industries which extract the resources already

available with nature.
For example; The petroleum industry, iron ore mines, the
fishery industry, etc.
• Generic: Industries involved in the rearing of cattle, animals
and birds or growing of plants, flowers and vegetation to sell
them or their products.
For example; Sunflower farms, dairy farming, horticulture

Secondary Industries

Secondary Industries procure the natural resources produced by

primary industries as raw material to create different goods to meet
customer requirement.
For example; Road contractors, bag manufacturing industry, medicine
manufacturing
The secondary industries are bifurcated into two streamlines:

1. Manufacturing: Industries engaged in the production and

creation of goods to convert raw material into the usable
form are known as manufacturing industries. There are four
types of manufacturing industries:
o Analytical: Analytical industry focuses on
extracting different products from the specific raw
material.
For example; Extracting LPG from natural gas
o Synthetical: These industries concentrate on
combining various ingredients to create a new
product.
For example; the perfume industry
o Processing: When the raw material is treated at
different stages to acquire the final product, it is
known as processing.
For example; The salt processing unit
o Assembling: Assembling refers to the compilation
of different products to develop a new product.
For example; Mobile phones manufacturing
 2. Construction: Building up of immovable goods using various
goods as raw material to serve the consumer’s utility is
called construction.
For example; Construction of dams from bricks, cement, iron,
etc

Tertiary Industries

The tertiary industry refers to the service industry. It includes all kinds
of services provided to consumers to satisfy their needs and
requirements.
For example; Schools, hospitals, hotels, banks, etc.

Commerce

Commerce is the means of making the product available to consumers.

It works parallel with the industries and can be seen as a medium
between the enterprises and the consumers.

E-commerce: E-commerce refers to the trading of goods and services

through the online market over the internet. Commerce is further sorted
into two principal heads:

Trade

Only the production of products and services is not enough until it

reaches the end consumers. Trade is the channel between the
industries and the consumers, that is responsible for the distribution of
products and services.
 It is basically of
two types:

1. Internal Trade: Internal trade or domestic trade makes sure

that the goods and services are traded within the
geographical confinement of a country. It is further divided
into the following two categories:
o Wholesale Trade: Purchasing the products in bulk
quantity from the manufacturer and selling
comparatively in small amounts to the retailer at a
marginal profit is known as wholesale trade.
Wholesalers majorly deal with limited products.
For example; Wholesale gourmet store, aluminium
partition wholesaler
o Retail Trade: The retailer buys goods in
comparatively smaller quantity from the
wholesaler, to be sold further to the customers at
MRP (Maximum Retail Price) or an appreciated
price.
For example; Apparel shop, furniture Showroom
2. External Trade: When goods and services are traded outside
the geographical confinements of a country, it is termed as
external trade or foreign trade. External trade can be
classified as follows:
 o Import: Import refers to procuring goods and
services from the other country.
For example; India imports lead from Nigeria
o Export: Selling or supplying of products and
services to the other country is termed as export.
For example; Spain exports porcelain tiles to India
o Entrepôt: Purchasing goods from one nation and
selling it to another country is called entrepôt.
For example; Club factory.in buys products from
all over the world and sells them universally

Auxiliaries to Trade

To simplify the trading process, there is a need for additional activities

which are termed as auxiliaries to trade.
Such services synchronise and manage the buying and selling process
for both the sellers and the buyers.

The various
kinds of auxiliaries to trade are mentioned below:

• Warehousing: To store the goods produced in bulk

quantities, to keep the products safe from damage and to
maintain a regular supply of goods in the market is known as
warehousing.
For example; Cold storage warehouse to keep ice-creams
fresh
 • Transportation: The process of moving the finished products
from the industry or production unit to the marketplace for
easy availability to customers is known as transportation.
For example; Goods train transports a variety of goods on a
large scale
• Insurance: Insurance of goods provides financial security
against the risk of loss or damage caused to the products at
the time of transport or otherwise.
For example; Fire insurance of the crackers stored in a
warehouse
• Banking and Finance: There are financial institutions that
provide financial leverage to the trading firms in the form of
business loans and other banking services. Such as fund
transfer, cheque payments, current account transactions, etc.
For example; Commercial banks
• Advertising: To introduce and generate product demand in
the market, advertising the product through newspapers,
radio, television, internet, hoardings, etc. is essential.
For example; Hoarding advertisement agencies
• Communication: Communication implies the service
facilitating the exchange of opinion and information between
two or people.
For example; Internet service provider

Conclusion

With the growing population, the demand for merchandise is rising

tremendously. To satisfy these demands for ensuring customer
satisfaction, business activities play a significant role.

The world is experiencing an era of digital evolution. Thus the concept

of e-commerce has developed as a part of business activities.

Business Process Modeling (BPM)

Business process modeling (or) process modeling, is the analytical

representation or put simply an illustration of an organization’s business

processes. Modeling processes is a critical component for effective business

process management.

Process modeling software gives an analytical representation of 'as-is'

processes in an organization and contrasts it with 'to-be' processes for

making them more efficient.

Why Use Business Process Modeling?

Your first step in modeling is actually pen and paper. However, to actually run
a business process, you will need to digitize that process in a way that a

workflow engine can understand.

Business process modeling software allow you to represent your process in a

digital way that can then be transferred to a live automated process.

There are many benefits to business process modeling:

• Gives everyone a clear understanding of how the process works

• Provides consistency and controls the process
• Identifies and eliminates redundancies and inefficiencies
• Sets a clear starting and ending to the process

Business process modeling can also help you group similar processes

together and anticipate how they should operate. The primary objective of
business process modeling tools is to analyze how things are right now and

simulate how should they be carried out to achieve better results.

Business Process Modeling Techniques
Business process modeling can be expressed through flowcharts, programs,
hypertext, or scripts. There isn’t just one way to implement business process

modeling; in fact, you can choose from as many as 12 techniques.

Here are some of the most common business process modeling techniques:

1. Business Process Modeling Notation (BPMN)

BPMN 2.0 has become something of a standard syntax used by process
analysts and those who create business modeling tools. It is a relatively
simple usage of lines, arrows, and geometric shapes that all communicate
the flow and nuances of the process. A process consultant can look at a

BPMN 2.0 model and know exactly how it should function.

“Eventually, when [those] companies get their products shipping and crank
up their marketing machines, BPMN will be the unquestioned standard for
process modeling and execution. But right now, we are still between the
news and the reality.” - Bruce Silver, Process Consultant and Author of the

book BPMN Method and Style

However, BPMN 2.0 is still a learned language, and although relatively

simple, isn’t immediately intuitive for the regular business user. It is a great
tool for process consultants, but not helpful for those looking to create their
own applications.
2. Universal Process Notation
Instead of having a new language to learn, a more intuitive system

is Universal Process Notation or UPN.

UPN provides a simple box for each task to be completed. The box shows
what happens, who is assigned to it, and when it happens in the sequence. It
is extremely useful for IT to design and analyze processes, for management
to comply to business norms, and - more importantly - for end business users

to understand processes as intended. Kissflow uses UPN in its modeler.

3. Flowchart Technique
Flowcharts explain complex process flows in a simple yet effective way. They
illustrates process steps in their sequential order, going from inputs to actual
process to outputs. In fact, flowcharts provide the basic framework for BPMN

to display advanced process flows.

Rather than showing the steps sequentially, Gantt charts are able to show
the entire process using ‘time taken’ as one of the main axes. It does a better
job of showing the overall time taken to complete a project than other options.

5. Petri-Nets
Traditionally a modeling technique in mathematics, petri-nets are also useful
for modeling business processes. Petri-nets classify or color-code complex

workflow steps, users, and routes in different colors.

What Do I Need in a Process Modeling
Software?
Most BPM Suites include business process modeling tools in them. However,

some have the modeler as a separate application.

The modeler is one of the most important elements in a BPMS, and you
should spend a lot of time learning it before committing to buy a suite.

Great business modeling tools should:

• Be easy to learn for the business departments

• Be simple for IT teams to communicate with other departments
• Be inexpensive and industry compliant
• Have an integrated workflow editor tool with graphic interface

• Be able to simulate workflow before implementing

Operating Activities in a Business

Operating activities are the core activities that a business performs to earn
revenue. These activities affect the cash flow coming in and out and determine
the net income of the business.

Some fundamental operating activities for a business are sales, customer

service, administration and marketing. These activities are part of the normal
functioning of a business that affects its monthly, quarterly and annual income
and profits. They also provide the majority of the cash flow and determine
profitability.
The operating activities of a business are found in the business’ financial
statements particularly the cash flow statement and the income statement.

The operating activities section in these statements is considered the most

important section since it provides cash flow information related to the daily
operations of the business and allows stakeholders to see the viability of the
business. It also determines the business’ ability to pay its current expenses
such as labor costs and debt repayment.

The operating activities that result in revenue generation are:

• Cash receipts from sales

• Sales of shares
• Income earned from investment
• Settlements of lawsuits and insurance claims
• Accounts receivables collection
• Supplier refunds

The operating activities that result in cash outflows are:

• Employee payments
• Supplier payments
• Tax payments
• Refunds to customers
• Settlements of fines and lawsuits
• Interest to creditors
• Equipment purchase
• Interest payment on loans and dividends

In the statement of cash flows, the cash flow from these activities is listed in the
operating activities section. They are focused changes in the current assets and
current liabilities and the net income. Apart from operating activities, cash flow
statement also lists the cash flow from investing and financing activities.
Revenue-Generating Activities
What is the main cash-generating activity of the business? There are two
primary revenue-generating activities of businesses – providing services and
selling products.

Marketing and Advertising

Operating activities include promotion and advertising of goods and services.
For example, a tax accountant might organize introductory training sessions for
small businesses at the local chamber of commerce.

Administration
Functions such as accounting, purchasing, human resources, purchasing,
facility maintenance and information technology are included under operational
activities.

Maintenance and Customer Service

The related expenses of customer service and facilities maintenance include
rent, utilities, supplies, insurance and licenses.

What Are the 6 Types of Business Activities?

Regardless of their activities, the ultimate goal of any business is to maximize
profits. Keeping this in mind, there are six types of activities that all businesses
have to undertake at some point or the other.

1. Sales
The sales team is the lifeblood of every business. The sales team reaches out to
the customers to expand the customer base and secure repeat sales.

2. Marketing
Marketing and advertising help in developing the brand and boosting the
exposure of the business and its services.

3. Finance
Budgeting and finance help in deciding how the revenue is to be utilized for
growing the business and achieve optimum results.
4. Accounting
The process of managing the money that goes in and out of your business falls
on accounting. Keeping up to date with the expenditure and income allows you
to ascertain where and how the money is spent.

5. Customer Service
Customer service helps in securing new clients, build lasting relationships and
promote referrals for your business.

6. Human Resources
The human resources team is an essential part of maintaining current
operations and planning for expansion. They are responsible for conducting
interviews, hiring applicants, dealing with interpersonal conflicts and determining
the benefit packages employees should receive.

Not every business activity is an operating activity. The principal operating

activities include any cash flows that relate to the core or activity that business
performs to earn a profit.

The reporting of operating activities helps in determining the focus of the

business and its earning potential.